The current property market is displaying interesting new trends - and while there has been no significant increase in new stock volumes, under-resourced spec buyers are finding it far more difficult to operate. 

First-time home buyers are taking advantage of the cheaper finance to acquire more expensive properties, with such buyers accounting for almost 53% of home loans during the second quarter, according to ooba.

South Africa’s young population, with nearly two-thirds of citizens currently below the average age of a first-time buyer (34 years), provides the market with a solid underpinning, as conditions now make it cheaper to buy than rent. 

What we have seen is that the residential property market has come out of the gates very strongly after the restart of real estate activities at the beginning of June and during July 2020, with most of this activity driven by realistic pricing expectations and motivated sellers.

However, to temper any expectations of an unrealistically buoyant property market, it is important to note that "there has not been any significant increase in new stock volumes coming onto the market, when compared to ‘normal volumes.

'Speculators having to offload'

Although the lower prices and even lower interest rates have created a real buyers’ market, "quick in-and-out buyers are no longer nearly as evident as they were 12 to 24 months ago".

It is very often these speculators who are now having to offload and thereby adding to lower prices. Typically, a spec buyer would move in on a new development showing all the signs of being successful, pay a fairly small initial deposit and buy with the expectation to sell his plot at a significant profit within 12 to 18 months or less, of taking transfer. By this time progress on the development is there for all to see and its popularity more obvious to the general public.



Spec buying of this kind has seldom been good for developments because it tended to delay progress. The spec buyer, possibly unable or reluctant to pay for building on his property, might have held back on this extra outlay as long as possible before authorising it. This could lead to the perception of the development being slow selling and not as good as it was expected to be. When finally building, spec buyers would often not take trouble caring for the plot surroundings.

Under the current economic conditions, under-resourced spec buyers are finding it far more difficult to operate and most are no longer active. Fortunately, their place is being taken by “competitively priced, good value, attractive” developments usually priced in the R1,5 and R2,5 million bracket".

Owner occupier buyers on the other hand "put their hearts and souls into the development and work hard to beautify not only the gardens and the ancillary areas of their own homes but also those of their estates. In one case, a new buyer took it upon himself to improve an adjacent park and was so successful that he soon had enthusiastic fellow residents joining him in what is still an entirely voluntary and unpaid effort".


'Proportion of tenants too high'


Owner occupiers, almost always cause the value of their homes and the estates in which they are sited, to rise rapidly. Although Alexander Swart are strong proponents of buy-to-let investing, they are aware of projects (especially those with freestanding homes in landscaped estates) in which the proportion of tenants is too high. Tenants seldom have the same motivation to improve their environment. For the same reasons one does not want to have too many spec investors. Fortunately, this type of investment is temporarily quiet.

The exceptionally low property market interest rates make it great for buyers right now. Those who fail to make the most of the present highly favourable buying conditions, will in time find that they have missed out badly.



Courtesy of Property24



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